Geithner Pressed British Regulators in 2008 on Libor

Source: Reuters

Geithner pressed British regulators in 2008 on Libor

Fri Jul 13, 2012 2:22am EDT

By Timothy Ahmann

WASHINGTON (Reuters) - U.S. Treasury Secretary Timothy Geithner pressed the Bank of England in June 2008 to make changes in the way that Libor, a key interest rate benchmark, was set, according to documents obtained by Reuters.

Geithner, who was the head of the New York Federal Reserve Bank at the time, sent a private email to BoE Governor Mervyn King recommending six ways to enhance the credibility of the London interbank offered rate.

More than a dozen banks are under investigation by authorities in Europe, Japan and the United States over suspected rigging of the global borrowing cost benchmark, which is used in contracts worth trillions of dollars globally.

The June 1, 2008, email, first reported by the Washington Post, included a two-page memo dated May 27 of that year that suggested establishing best practices for calculating Libor, "including procedures designed to prevent accidental or deliberate misreporting."

1. So he at least suspected rigging in 2008.

2. So yesterday was Bernanke, right? and today Geithner, or is this a repeat.

Either way, why did he "press" them instead of exposing and charging or whatever we do in cross country financial issues regarding criminal fraud? Involve Congress? I don't know, but he clearly did nothing.

It's like so many of the "punishments" the banks are getting, just kind of lame response to serious problems, and potential criminality.

4. Looks like this was brought to the attn of the NY Fed in 2007:

July 13 (Bloomberg) -- The Federal Reserve Bank of New York said it became aware that Barclays Plc was underreporting borrowing costs for the London interbank offered rate as early as 2007.

A Barclays employee explained to a New York Fed staffer in April 2008 that “Barclays was underreporting its rate to avoid the stigma associated with being an outlier with respect to its LIBOR submissions, relative to other participating banks,” the New York Fed said in a statement posted today on its website.

“The Barclays employee also stated that in his opinion other participating banks were also under-reporting their LIBOR submissions.”